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Wednesday, November 22, 2006

On the Hot Seat

I had the opportunity to sit down yesterday in a unique situation where I was one of 6 individuals invited to sit around a conference room table and critique business practices of the CEO, who willingly opened his books and office struggles to us for advice.

Maintaining confidentiality, I’ll only say that his professional firm started in his basement 5 years ago and has grown to 17 employees and 1.3mil in annual revenue. He is now dealing with what many driven entrepreneurs deal with. How to keep growing his business while maintain profitability as well as his sanity.

We each took our turn giving our opinion and recommendations of his situation. When my turn came, I shared information from the heart and after things settled I realized I just told a man 20 plus years older and much more experienced in business than I why what he is doing won’t work.

By the time it was over, I kind of felt bad, because he looked like he'd been beat up. Everyone telling him what was wrong. He was definately on the hot seat for the day, but at some point, I'll get to take my turn in the hot seat and get beat up on by the others in the group.

Here is the gist of what I said:

“Your dilemma of how to grow out of $5,000 a year clients and into $35,000 a year clients doesn’t stem directly from a marketing standpoint, but a staffing standpoint. Change your views so that you believe no one should ever have to be fired. Instead believe that if you take responsibility and hire the right person, then spend time developing, motivating and engaging the person, you will never have to fire them.

Keeping employees is a concern and you’ve mentioned giving ownership in the company to keep employees motivated, but don’t feel the only way to give ownership in the company is to give or sell stock. Someone who doesn’t have ownership leaves when an obstacle comes along. Someone who has ownership stays and fights for the company. The key to ownership is not a legal ownership, but a perception that what they do influences the organization. Give them the ability to make decisions. If they can control the future, they are vested in the company. Let them decide and then live with their decisions.

At the same time, engage your staff in a mentoring role. You talk about sending them to training and continuing education, but what are you deliberately doing to mentor them so they come to understand not just accounting principles, but corporate philosophy on how to treat clients. As you mentor your people, you will create individuals that have better skills in certain areas than you do. At that point, you have to transfer responsibility to them in front of your clients by ensuring that your employee is now seen as the expert who is as good as, if not better than you in this area.

Once you accomplish this clients will stop calling you to find out how much they can deduct mileage for and start calling your employees. This is crucial because it allows a smooth transition from you to your employees of responsibility within the company. It also allows frees up your time to get out of the office and find two $35,000 a year clients. Because your business is one of referrals, you will stop gaining plumbers and electricians at $5,000 a year and start gaining larger clients because large clients travel in circles of large clients and refer large clients.”

I wanted to share this with you because I think it is good advice for anyone who is going through struggles of expanding beyond what they can directly control in their business.